Wes Moss: Covering the Cost of College

With the astronomical price of college these days, it’s easy for families to feel overwhelmed.

I recently wrote about why I think paying for college is still a wonderful investment for most people, but I’ve not written about how to make it more financially feasible for families.

Since there are so many nitty-gritty details when it comes to financing college, I reached out to Terry Wilfong, an expert in this field. He has done extensive work on college admissions both inside and outside universities. Most recently he founded the College Options Foundation which helps high school students in JROTC and teenagers in military families apply for college and submit for financial assistance.

Terry informed me that for a variety of reasons, the absolute best opportunity that any student has to save money on college is still to have a good GPA, good SAT and ACT scores and to be well-rounded in extracurricular activities.

In fact, Georgia offers the HOPE Scholarship which essentially covers the cost of tuition of colleges in Georgia for students who graduate high school with a 3.0 GPA and who continue to maintain it in college. Even with this program in place, though, Terry suggests that students look into FAFSA before settling on staying in-state.

FAFSA (Free Application for Federal Student Aid) is a part of the U.S. Department of Education, and they are the largest provider of student financial aid in the nation. This program provides more than $150 billion in federal grants, loans and work-study funds each year to more than 13 million students.

Eligibility is based on several different aspects of the recipient’s family including the age of the parents, the number of people in the family, the family’s assets, the parent’s income and the student’s income. Because there are so many ingredients that determine who gets assistance and who doesn’t, Terry encourages everyone to apply.

FAFSA bridges the gap between what families are expected to cover by themselves (the expected family contribution or EFC) and the school year’s total cost. For example; a school year’s total cost may be $40,000, and FAFSA determines that the family should cover (or can afford) $15,000. The “gap” that FAFSA and the school may help with is $25,000. That $25,000 (or a percentage of the gap) will be filled will be a mix of gifted money, meaning that it has no strings attached, and student loans (money that has to be paid back).

For many schools the assistance received through FAFSA won’t cover 100 percent of a family’s need. Instead, FAFSA might cover 75 percent of the gap. Oftentimes this requires the student to take out additional student loans to make up the difference.

You can find what percentage a school typically covers for FAFSA by visiting CollegeData.com. Find the schools you’re interested in, and then visit their Money Matters tab. From here you can see the general breakdown of what it costs to attend that school, and a profile of the school’s financial aid. Be sure to look at the “Average Percent of Need Met” and the “Average Award” section. Using those numbers, you can calculate the percentages that they’ll typically cover, and have a better idea of what that college will likely cost you.

At Boston College for example, if you qualify for their FAFSA program, then they’ll typically help you cover 100 percent* of the cost beyond your family’s EFC (*see average percent of need met). The Money Matters tab under Boston College shows that on average 89 percent of those costs are covered as gifts ($31,019 needs based gift divided by $34,871 average award). While the total cost per year and “gap” will vary from student to student, what most families will pay is likely to be significantly less than the $62,822 full annual sticker price.

Closer to home, UGA’s approximate “cost of attendance” is $21,880, seemingly much lower than the cost of my above example for Boston College. However, UGA’s FAFSA program only covers about 72 percent of a student’s “average need.” This means that even if you live in-state and you qualify for assistance at both schools, you could still wind up paying a similar amount for either school, despite the headline price tags being so different.

Both BC and UGA are wonderful schools, but at first glance the price to attend BC looks to be three times as much. Depending on your qualification for FAFSA that may not be the case, so don’t automatically disqualify schools on their headline price tag alone.

FAFSA isn’t available to everyone, but it makes sense for nearly everyone to apply. As the cost of college continues to skyrocket, understanding the mechanics of how a school supports the student’s ability to pay will allow you to understand and select the best school for your money.